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Market Segmentation
Market Segmentation is the process of dividing a heterogeneous market into homogeneous sub-units.
Helps distinguish one customer group from another within a given market. Facilitates proper choice of target market. Helps divide the markets and conquer them. Helps achieve the specialization required in product, distribution, promotion and pricing for matching the customer group and develop marketing offers and appeals that match the needs of such group.
Makes the marketing effort more efficient and economic. Helps spot the less satisfied segments and succeed by satisfying such segments. When segmentation attains higher sophistication, customers and companies can choose each other and stay together.
Segmentation Variables
Segmentation Variables
Geographic
Behavioral
Demographic
Psychographic
Geographic Segmentation
Segmentation of consumers based on geographic factors like climatic zone, region, state, district and urban/rural area, constitute geographic segmentation.
Demographic Segmentation
Segmentation of consumers based on demographic factors like age, sex, marital status, family size, race, religion , community, language, occupation, income/purchasing capacity etc.
Demographic Segmentation
Age And Life-Cycle Stage -Consumer wants and abilities change with age.
Demographic Segmentation
Life Stage Persons in the same part of the life cycle may differ in their life stage Life stage defines a persons major concern, such as getting married, buying home etc
Demographic Segmentation
Gender - Men and women have different attitudes and behave differently, based partly on genetic make up and partly on socialization.
Demographic Segmentation
Income- Income segmentation is a long standing practice in a variety of products and services. Income determines the ability of consumers to participate in the market exchange and hence this is a basic segmentation variable.
Generation
Each generation is profoundly influenced by the times in which it grows up the music, movie, politics and defining events of the period. Demographers call these generational group cohorts.
Social Class
Social class has a strong influence on preferences in cars, clothing, home furnishings and many companies design products and services for specific social classes. The concept of social class in India is influenced by the caste system.
Psychographic Segmentation
In psychographic segmentation , buyers are divided into different groups on the basis of psychological / personality traits , lifestyle or values.
Life style
Is how a person lives. It is the individual characteristics that have been shaped & formed thru social interaction. Influences all aspects of consumption behavior Is determined by:
AIO Variables
Activities Work Hobbies Social events Vacation Clubs Shopping Sports Interests Family Home Job Community Fashion Media Achievements Opinions Themselves Demography Age
Social Issues Education Politics Business Economics Education Future Culture Income Occupation Family size Dwelling City size Life cycle stage
Entertainment Recreation
VALS
One of the most popular commercially available classification systems based on psychographic measurement is SRI Consulting Business Intelligences VALS Framework. VALS signifies values and lifestyles.
The main dimension of the VALS segmentation framework are consumer motivation and consumer resources. Consumers are inspired by one of three primary motivations : ideals, achievement, and self-expression.
ACTION ORIENTED
THINKERS
ACHIEVERS
EXPERIENCERS
BELIEVERS
STRIVERS
MAKERS
VALS NETWORK
Innovators
Innovators are successful, sophisticated, take-charge people with high self-esteem. Purchases often reflect cultivated taste for relatively upscale, niche-oriented products and services.
Thinkers
Thinkers are motivated by ideals. They are mature, satisfied, comfortable, and reflective people who value order, knowledge, and responsibility. They tend to be well educated and actively seek out information in the decision-making process. They are well-informed about world and national events and are alert to opportunities to broaden their knowledge.
Achievers
Motivated by the desire for achievement, Achievers have goaloriented lifestyles and a deep commitment to career and family. They favor premium products that demonstrate success to their peers
Experiencers
Experiencers are motivated by selfexpression. Young, enthusiastic, and impulsive consumers, who seek variety and excitement. They spend more on fashion, entertainment and socializing
Lower Resources
Believers-conservative, conventional people with concrete beliefs based on traditional, established codes: family, religion, community, and the nation They prefer familiar products and are loyal to established brands
Strivers
Strivers are trendy and fun loving . Money defines success for Strivers, who don't have enough of it to meet their desires. They favor stylish products that emulate the purchases of people with greater material wealth .
Makers
Makers express themselves and experience the world by working on it building a house, raising children, fixing a car, and have enough skill and energy to carry out their projects successfully. They seek products with a practical or functional purpose
Survivors
Survivors live narrowly focused lives. Elderly, passive people who are concerned about change. They are loyal to their favorite brands.
Behavioral Segmentation
In behavioral segmentation, the market is divided on the basis of purchase decision and product or brand usage made by consumers.
Decision Roles
People play five roles in a buying decision : Initiator, Influencer, Decider, Buyer and User. Recognition of the different buying roles and specification of the people who play the roles for specific products and services are vital for marketers.
Behavioral Variables
Many marketers believe behavioral variables occasions, benefits ,user status , usage rate, buyer readiness stage, loyalty status , and attitude are the best starting points for constructing market segments.
Occasions
A number of products, such as chocolates ,snacks/sweets or cards offer special festival gift packs during these occasions. Occasion segmentation can help firms expand product usage.
Benefits
Buyer are classified according to the benefits they seek. Many product categories offer different products targeted at people who seek different sets of benefits.
User Status
Every product has its nonusers, ex-users, potential users, first- time user and regular users. Market leaders tend to focus on attracting potential users because they have most to gain . Smaller firms focus on trying to attract current users away from the market leader
Usage Rate
Markets can be segmented into light , medium, and heavy product users. Heavy users are often a small percentage of the market but account for a high percentage of total consumption.
Buyer-Readiness Stage
Some people are unaware of the product, some are aware , some are informed, some are interested, some desire the product, and some intend to buy. The relative numbers of consumers at different stages make a big difference in designing the marketing program.
Loyalty Status
1.Hard - core loyals Consumers who buy only one brand all the time. Split loyals Consumers who are loyal to two or three brands. Shifting loyals Consumers who shift loyalty from one brand to another. Switchers Consumers who show no loyalty to any brand.
Attitude
Five attitudes about products are enthusiastic, positive , indifferent, negative and hostile.